Category Archives: New Jersey Supreme Court

In a highly anticipated decision, the New Jersey Supreme Court held that the issue of salary step increments is a mandatorily negotiable term and condition of employment. However, the Court did not decide whether New Jersey’s Public Employment Relations Commission was correct to adopt the static status quo doctrine in lieu of the dynamic status quo doctrine. Instead, the Court determined that the express terms of the parties’ expired CNAs required the public employer at issue to advance employees along those CNAs’ salary step guides, even after those CNAs expired.

The issues presented to the Supreme Court originated in the cases of In re County of Atlantic and In re Township of Bridgewater. In County of Atlantic, PERC determined that, given the current landscape, the static status quo doctrine would advance labor negotiations between New Jersey’s public employers and employees better than the dynamic status quo doctrine, which PERC previously followed. Under the static status quo doctrine, employees do not advance along a contract’s salary step guide between the time that the contract expires and before a subsequent contract is executed, whereas the opposite is true under the dynamic status quo doctrine. On the heels of County of Atlantic, PERC decided Township of Bridgewater, in which it concluded that the issue of salary step increases after contract expiration is not a term and condition of employment and therefore not mandatorily negotiable. On appeal, New Jersey’s Appellate Division reversed PERC. The Appellate Division found that PERC was not authorized to depart from the dynamic status quo doctrine in the manner that it did, and that post-contract step increases are terms and conditions of employment that cannot be terminated unilaterally.

Ultimately, the Supreme Court affirmed the Appellate Division’s decision on “other grounds.” Nevertheless, the Supreme Court undermined PERC’s Bridgewater decision, when the Court concluded that the issue of salary step increments is a mandatorily negotiable term and condition of employment because that issue “is part and parcel to an employee’s compensation for any particular year.” However, because the Supreme Court’s decision rested upon specific contract language, the Court did not decide the issue of which status quo doctrine is appropriate. Nevertheless, the Court suggested that a contract that is silent with respect to the impact of contract expiration on step increases may require “careful consideration of past practices, custom and the viability of the dynamic status quo doctrine.” Accordingly, the Supreme Court advised that “parties would be wise to include explicit language indicating whether a salary guide will continue beyond the contract’s expiration dates.”

Unfortunately, not all marriages are happily ever after. When divorce seems inevitable, losing your job as a result of a looming divorce is something no employee wants to worry about. On June 21, 2016, the New Jersey Supreme Court in Smith v. Millville Rescue Squad (074685 (A-19-14) unanimously ruled that the New Jersey Law Against Discrimination’s (“NJLAD”) protection against discrimination on the basis of marital status also includes protection for divorced employees. The New Jersey Supreme Court upheld the 2014 decision of the Appellate Division which concluded that the Millville Rescue Squad’s decision to terminate the plaintiff, Robert Smith, based on an assumption about his ability to work with his ex-wife was discriminatory. In finding that the protections afforded by NJLAD’s marital status are not limited to the state of being single or married, the New Jersey Supreme Court effectively extended the reach of the NJLAD to include those who are separated, going through a divorce or divorced and recently widowed. Employers are prohibited from assuming, based on “invidious stereotypes,” that an employee will be disruptive or ineffective simply because of their marital status.

Smith, a 17-year veteran at Millville Rescue Squad (“MRS”), was allegedly fired when his supervisor heard the news about an impending separation from his then-wife and coworker. Knowing the contentious nature of divorces, and worried about the spillover effect of a potential divorce involving two of his employees, Smith’s supervisor allegedly warned him that his continued employment with Millville was contingent on how the separation turned out. After receiving confirmation from Smith that an amicable reconciliation was unlikely, Smith’s supervisor allegedly stated that he could not promise that it would not affect plaintiff’s job, as he believed Smith and his co-worker wife would certainly have an “ugly divorce”. Smith was subsequently terminated for performance based on “company restricting” reasons.

Smith ultimately filed suit for wrongful termination and discrimination in violation of the NJLAD based on marital status, claiming the reasons given for his departure were discriminatory, improper and pretextual. At oral argument before the New Jersey Supreme Court, the attorney for MRS conceded that although Smith’s supervisor’s comments were made in reference to the potential negative impact the divorce would have in the workplace, the disparaging comments were not signifying a bias against divorce itself. Smith contended that the supervisor’s ugly comment demonstrated clear evidence of prejudice given his stellar performance record.

Notably, the New Jersey Supreme Court was careful to emphasize that the presumptive extension of NJLAD does not preclude employers from implementing and enforcing “anti-nepotism” policies in the workplace, confirming that the ability of an employer to restrict employees related by blood or marriage from working together has not been diminished. Nonetheless, such policies must be enforced in a nondiscriminatory manner and in strict adherence the precedent set by NJLAD. Additionally, the Court further clarified that employers are allowed to discipline employees based on performance and conduct, irrespective of their marital status so long as the reason for their discipline is not related to circumstances in his or her personal life.

As a result of this decision, employers must use caution when terminating an employee who is either in the process of getting divorced or is divorced. The decision to terminate an employee cannot be based on an assumption about an employee’s inability to perform their job given for reasons related to their marital status. The decision to terminate must only be based on actual workplace conduct or performance issues unrelated to marital status that has been clearly and routinely documented.

For more information on this decision and best practices regarding employee documentation and termination, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq, Director of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

On June 15, 2016, the New Jersey Supreme Court issued its long-awaited decision in Sergio Rodriguez v. Raymours Furniture Company, Inc., in which it addressed whether the two-year statute of limitations under the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1 to -49, may be altered pursuant to a private agreement. The issue was a matter of first impression for New Jersey courts. In a unanimous opinion authored by Justice Jaynee LaVecchia, the Court held that “a private agreement that frustrates the LAD’s public-purpose imperative by shortening the two-year limitations period for private LAD claims cannot be enforced.”

Plaintiff, Sergio Rodriguez, was hired by defendant, Raymours Furniture Company, Inc., the parent company of furniture retailer Raymour & Flanigan, in September 2007, and sustained an injury to his knee in April 2010. After having undergone surgery for the injury, along with a brief recovery period, Rodriguez was cleared to resume his work duties in September 2010. Just two short days after his return to Raymour & Flanigan, Rodriguez was terminated as part of a company-wide reduction in force. Rodriguez instead contended that he was targeted because of his injury and asserted that others with less seniority or distinguishing features were retained.

Rodriguez brought a lawsuit in the Superior Court against Raymours in July 2011, seven months after his termination, alleging wrongful termination based on an actual or perceived disability under the LAD, which carries a two-year statute of limitations. However, Raymour & Flanigan’s employment application, which Rodriguez signed, included a provision shortening the period for an employee to file a claim against the company to six months. The provision stated that “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit,” adding, “I waive any statute of limitations to the contrary.”

The trial court granted summary judgment in favor of Raymours, upholding the validity of the contractual limitation as clear and unambiguous and neither unreasonable nor against public policy. On appeal, the Appellate Division also sided with Raymours, holding that employers are generally able to shorten a statutory limitation through an employment contract so long as the provided language is clear and unambiguous. While pointing out that the language of the provision was acceptable and not misleading, the Appellate Division noted that “[t]he disputed contract provision was not buried in a large volume of documents. It was contained in a two-page application and set forth very conspicuously in bold oversized print and capital lettering, just above the applicant’s signature line. The terminology was clear and uncomplicated.” Ultimately, the trial court and Appellate Division held that the provision met the aforementioned threshold and by signing the document, Rodriguez waived his rights to access the LAD after the six-month period expired.

On appeal to the Supreme Court, the plaintiff made two arguments, generally focusing on principles of contract unenforceability based on unconscionability. Because this contract was one of adhesion, the plaintiff contended that it was both procedurally and substantively unconscionable and unenforceable due to the inherent imbalance of power in an employment application. Furthermore, the plaintiff argued that permitting such a contractual shortening of the limitations period would frustrate the remedial scheme of the LAD. The defendant-employer argued that it is well established under New Jersey law that parties may privately contract to shorten statutes of limitation and that the waiver at issue here was clear and unambiguous.

This case drew significant interest from the legal community. The New Jersey State Bar Association, the New Jersey Association for Justice, the American Civil Liberties Union of New Jersey, and the National Employment Lawyers Association all submitted amicus curiae briefs generally supportive of the plaintiff’s position, focusing on the “singular public-interest importance of the LAD.” The Academy of New Jersey Management Attorneys filed a brief in support of the defendant, arguing that shortening the limitations period under the LAD did not frustrate public policy and was within private parties’ ability to contract.

While recognizing the “strong belief” in the freedom to contract in New Jersey, the Court emphasized the public interest that the LAD serves to protect in trying to eliminate discrimination. In making its determination, the Court relied heavily on its decision in Montells v. Haynes, 133 N.J. 282 (1993), where the two-year statute of limitations for claims under the LAD was first established. In addition, the Court looked to the State Legislature’s more than two-decades-long acceptance of that limitations period, noting that the LAD has been amended in other respects during that time period. The Court offered several reasons in support of its decision:

Shortening the time period for bringing an LAD action in the Superior Court would undermine the integrated nature of the statutory avenues of relief and election of remedies made available to claimants;

A limitations period of shorter than two-years would effectively eliminate claims because it takes time for an individual to bring the claim forward and the two-year period established in Montells was purposefully designed to impose uniformity and certainty;

A shortened limitations period might compel a person to file a premature LAD action where investigation might reveal a lack of a meritorious claim; and

Case law has incentivized employers to first receive workplace complaints, investigate them, and respond and any shortening of the period would “seriously affect an employer’s ability to protect itself.”

The Court emphasized that its decision was “rooted in the unique importance of our LAD and the necessity for its enforcement.” The Court further noted that “[r]estricting the ability of citizens to bring LAD claims is antithetical to that societal aspiration and defeats the public policy goal” of the law. While the Court’s decision was rooted in the public policy importance of the LAD, the Court also noted that it would have reached the same outcome based on the argument of unconscionability, though it did not go into a detailed analysis. The Court said that if such an analysis were to be performed, it would have struck down the agreement because the provision was located in an employment application, the plaintiff could not bargain, and it was an adhesion contract containing “indicia of procedural unconscionability.”

What does this decision mean for employers in New Jersey? The Court’s decision affirms its longstanding commitment to the public policy goals and remedial nature of the LAD. Unless and until the State Legislature decides to alter the limitations periods for claims under the LAD, it remains a two-year period and that time frame may not be amended through a private agreement.

While it appears that employers can no longer alter the two-year statute of limitations for LAD claims by private agreement, employers need to take action to ensure that they are in the best positon possible when litigation does arise, which can be achieved by:

Thorough documentation of performance issues;

Regular Anti-Discrimination and Harassment Training;

Proper paperwork for all reductions-in-force; and

Ensuring that prompt and thorough investigations of employee complaints are conducted.

Finally, when terminating an employee, employers may want to consider severance payments in exchange for a release of all claims. Most importantly, employers should consult with counsel to evaluate their arbitration agreements, employment policies and procedures, and ensure conformity with the Court’s ruling. For more information, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq, Director of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

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The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by jurisdiction, and the information on this blog may not apply to every reader. You should not take, or refrain from taking, any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Genova Burns.